agency analysis of transportation funding section 10 (a) · 1/21/2016 · agency analysis of...

Agency Analysis of Transportation Funding

Section 10 (a)

Costa Pappis, VTrans Policy and Planning

House Transportation Committee

January 21, 2016

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Analysis of Transportation Funding

Sec. 10. AGENCY ANALYSIS OF TRANSPORTATION FUNDING

(a) The Agency, in consultation with the Joint Fiscal Office, shall identify and evaluate funding sources, other than motor vehicle fuel taxes, that will be sufficient to maintain the State’s transportation system, accounting for State and federal policies that have and will continue to reduce motor vehicle fuel consumption.

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Review current state and federal transportation policies and trends that have and will continue to reduce motor vehicle consumption.

Review and expand on funding options contained in the Section 40 funding study (Act 153).

Review actions of other states and provinces in dealing with this issue.

Tasks


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Gasoline Consumption in Vermont (in gallons)


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290,000,000

300,000,000

310,000,000

320,000,000

330,000,000

340,000,000

350,000,000

360,000,000

370,000,000

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Gasoline Revenue in Vermont


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$20,000,000

$30,000,000

$40,000,000

$50,000,000

$60,000,000

$70,000,000

$80,000,000

$90,000,000

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Change to gasoline tax


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18.2 17.4

11.3

02%

4%

02468

101214161820

Prior to June2013

June 2013-June 2014

July 2014-onward

Pennies on theGallonAssessment onRetail Price

Changes to the Gasoline Tax


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$0

$10,000,000

$20,000,000

$30,000,000

$40,000,000

$50,000,000

$60,000,000

$70,000,000

$80,000,000

$90,000,000

$100,000,000

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

State Gasoline Revenues by State Fiscal Year ‐ Actual and Inflation‐Adjusted @ 2.5%

Inflation Adjusted Actual Revenue

General Economic Conditionso Price of Gasolineo The State and Nation’s Economic Health

Federal-Levelo Fuel Economy Standardso Tax Credits for Electric Vehicles

State-Levelo Greenhouse Gas and Energy Policieso Transit, Rail, Bike-Ped, and Park and Ride Investments o Community Revitalization Efforts.

Causes of Declining Motor Fuel Consumption


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Federal-Level


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Average Fuel Economy for Light‐Duty Passenger Vehicles – MPG by Model Year

28.5

36

20

22

24

26

28

30

32

34

36

38

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Source: U.S Bureau of Transportation Statistics

Federal-Level


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Corporate Average Fuel Economy (CAFE) Standards

Federal-Level


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Tax Credits for Electric Vehicles.o $2,500 for cars with 4 kWh battery packs

o $7,500 for cars with 16 kWh battery packs

State-Level – CO2 and Energy Goals


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Greenhouse gas reduction goals, set forth in 10 V.S.A. §578(a) - a 50% reduction of greenhouse gas emissions from 1990 levels by 2028 and, if practicable using reasonable efforts, a 75% reduction by 2050.

Comprehensive Energy Plan – 90% renewable energy by 2050.

Zero Emission Vehicle Memorandum of Understanding (3.3 million ZEVs by 2025).

State-Level: Public Transit


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2,000,000

2,500,000

3,000,000

3,500,000

4,000,000

4,500,000

5,000,000

5,500,000

2008 2009 2010 2011 2012 2013 2014$0

$5,000,000

$10,000,000

$15,000,000

$20,000,000

$25,000,000

$30,000,000

$35,000,000

2008 2009 2010 2011 2012 2013 2014

Vermont Transit Ridership 2008‐2014 AOT Public Transit Budget 2008‐2014

State-Level: Public Transit


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Vermont Rail Ridership 2008‐2014 AOT Rail Budget 2008‐2014

60,000

70,000

80,000

90,000

100,000

110,000

120,000

2008 2009 2010 2011 2012 2013 2014$0

$10,000,000

$20,000,000

$30,000,000

$40,000,000

$50,000,000

$60,000,000

2008 2009 2010 2011 2012 2013 2014

State-Level: Community Revitalization Projects


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What Other States Are Doing?


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Raised Gas Taxes (Pennies per Gallon) – Nebraska

Raised Gas Taxes and Fees – Michigan, Washington State, Idaho, South Dakota, Iowa

Eliminated Per Pennies on the Gallon and Replaced with Retail Assessment - Virginia

Raised Gas Taxes and Shifted a Portion to a Retail Assessment –Utah, Kentucky, North Carolina

Indexed Gas Taxes to Inflation – Michigan, Georgia

What Other States Are Doing?


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Issued Bonds – Connecticut, North Dakota, Mississippi, New Mexico

Dedicated Sales Tax to Transportation - Virginia

Transferred from the General Fund – North Carolina (eliminated transfer to General Fund)

Increased Motor Vehicle Fees - Delaware

Funding Options - Methodology


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Researched other states, stakeholder outreach, section 40 report

Use of existing data from DMV, JFO, and National Sources

No elasticities assumed

Presents menu of options – no rank or recommendations

Funding Options – Evaluation Criteria


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Revenue Stream Considerations

Revenue Potential ‐ the extent to which the option generates significant revenue. Revenue estimates are order of magnitude and do not account for price elasticity or other complex economic feedback effects. For example, a simple calculation indicates that a ten‐dollar increase in vanity plates would generate $275,000 in revenue. However, increasing the cost of may result in less sales which would reduce the actual revenue generated to less than $275,000 million.

Sustainability ‐ the extent to which the option self‐adjusts or can be adjusted easily from year to year in order to provide a stable, reliable source of revenue.

Flexibility ‐ the extent to which the mechanism is appropriate for a wide range of investments (and different transportation modes) and can be redirected to meet changing needs.

Implementation and Administration Considerations

Appropriateness for State Use ‐ the appropriateness of statewide implementation, including consideration of the impact on local governments (i.e. introducing certain fees).

Ease/Cost of Implementation, Administration and Enforcement ‐ the ease and cost to implement, administer, and enforce relative to the revenue‐raising potential.

Funding Options – Evaluation Criteria


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Economic Efficiency and Impact Considerations

Promotion of Efficient Use and Investment ‐ the extent to which the mechanism provides incentives for efficient use of the system by influencing travel choices and behavior.

Consistency with State Goals and Policies – the extent to which the mechanism is consistent with State Goals and Policies.

Equity Considerations

User and Beneficiary Equity ‐ the extent to which the mechanism can be structured to charge those who directly use or otherwise benefit from the funded investment.

Equity Across Income Groups ‐ the extent to which the mechanism limits costs for those who face the most difficulty in paying.

Geographic Equity ‐ the extent to which the cost allocation and impact of the mechanism can be structured to match the geographic distribution of the benefit.

Funding Options

Existing Taxes and Fees New Taxes and Fees – User Fees New Taxes and Fees – Broad-Based


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Analysis Sample


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Vehicle Inspection Fee EvaluationRevenue Stream ConsiderationsRevenue Potential Moderate revenue generation potential. Every $1

dollar increase in the price of inspection stickers will generate an additional $723,269 in revenue.

Sustainability Will require periodic adjustment to keep pace with inflation.

Flexibility Revenue generated can be used without restrictions.

Implementation & AdministrationAppropriateness for State Use Fee is currently in place.Ease/Cost of Implementation & Administration

Currently administered.

Economic Efficiency & ImpactPromotion of Efficient Use & Investment No effect.Consistency with State Goals & Policies No effect.Equity ConsiderationsUser & Beneficiary Equity Direct link to system users, but does not reflect

system usageIncome Equity Limited costs relative to other fees/taxes.Geographic Equity Burden consistent for all geographies

Funding Options – Existing Taxes & Fees


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Revenue Option Existing Revenue Potential

Vehicle Inspection Fees $5 per inspection $723,269 for every $1 increaseVehicle Rental Tax 9% (6% for transportation) $318,737 for every 1% increaseDMV Fees $80.1 million $800,110 for each 1% increaseHeavy Vehicle Registration Fees $1,441‐$4,375 $5,072 for every $1 increaseTruck Gross Vehicle Weight Registration Fees

Varies with weight $3.5 million annually

Light‐Duty Diesel‐Gasoline Registration Fee Parity

$70 (gas), $27 (diesel) $378,701 for parity

Vanity Plate fees $45 $12,414 for every $1 increaseSafety Violation Fees variable $39,496 for every 1% increasePurchase & Use Tax 6% (2% to Education Fund,

4% to T‐Fund)$16.2 million for 1% increase (from 6% to 7%, assuming all of the increase is dedicated to the transportation fund)

Reduction in P&U Allocation to Ed. Fund

$32.4 million $324,000 for every 1% reduction

Reduction in Allocation to Dept. of Public Safety

$22.7 million $227,000 for every 1% reduction

Funding Options – New Taxes & Fees (User-Based)


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Vehicle Lease Fee None $38,050 for every $1 charged

Ad Valorem Fees None $66.9 million above current registration fees

Auto Parts Allocation to T‐Fund None $4.85 million if allocated

Auto insurance Allocation to T‐Fund

None $2.5 million for every 1% allocated

Bicycle Registration Fees None $24,800 for each $1 charged

Electric Vehicle Fees None $1,046 for each $1 charged

VMT Fees None $63.5 million for every 1 cent above revenue neutral figure

Funding Options – New Taxes & Fees (Broad-Based)


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General Fund Allocation to T‐Fund

None $13.7 million for every 1% allocated

Sales Tax Allocation to T‐Fund None $2.3 million for every 1% allocated

Questions / Comments?


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agency analysis of transportation funding section 10 (a) · 1/21/2016 · agency analysis of...

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